Rul­ing clears up key­word con­fu­sion

Though ad­ver­tis­ers need to tread care­fully when bid­ding on com­peti­tors’ trade­marks as Google Adwords

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - DAR­REN OLIVIER & IAN LEAR­MONTH

INCOCHRANE Steel Prod­ucts v MSys­tems Group (ZASGHC 29/10/ 14) the ap­pli­cant sought an in­ter­dict against M-Sys­tems for bid­ding on its brand name, ClearVu, as a Google Adwords search key­word.

The ap­pli­cant did not have a trade­mark reg­is­tra­tion for its mark and ac­cord­ingly re­lied on un­law­ful com­pe­ti­tion. Specif­i­cally, it al­leged pass­ing off and a new species of un­law­ful com­pe­ti­tion, lean­ing on.

Judg­ment was de­liv­ered by Judge Ni­cholls on Oc­to­ber 29 2014. This case is open for leave to ap­peal, but at the time of writ­ing no such ap­pli­ca­tion has been filed.

One of the com­plaints re­lated to the bid­ding on the key­word ClearVu which gen­er­ated an ad­vert con­tain­ing a link to the re­spon­dent’s web­site. This ad­vert did not make any use of the mark ClearVu in its text.

The court con­sid­ered whether the com­mon law should be de­vel­oped to recog­nise “lean­ing on” and whether the ap­pli­cant had es­tab­lished the req­ui­site con­fu­sion or de­cep­tion nec­es­sary for pass­ing off. As a re­sult of its an­swers to th­ese is­sues the court de­clined to de­cide whether the ap­pli­cant had es­tab­lished a rep­u­ta­tion in ClearVu.

In con­sid­er­ing whether the com­mon law should be ex­tended to in­clude lean­ing on, the court noted that South African law is gen­er­ally op­posed to mo­nop­o­lies not specif­i­cally pro­vided by statute and that gen­er­ally use of a name, where there is not like­li­hood of con­fu­sion, is not pro­hib­ited. The court drew spe­cific at­ten­tion to the fact that the broad area of un­law­ful com­pe­ti­tion was not in­tended to pro­vide a rem­edy to a lit­i­gant who falls short of the re­quire­ments for pass­ing off.

The court con­cluded that lean­ing on, as pro­posed by the ap­pli­cant, was not un­known to our courts and that it has, in fact, been con­sid­ered (al­beit un­der dif­fer­ent de­scrip­tions) and re­jected, of­ten with crit­i­cism of the prac­tice of re­ly­ing on this doc­trine.

The court also noted that pass­ing off (and the com­mon law in gen­eral) protects good­will, not a trade­mark, per se and on this ba­sis con­cluded that pass- ing off and other com­mon law reme­dies do not pro­vide pro­tec­tion against di­lu­tion. Such pro­tec­tion, ac­cord­ing to the de­ci­sion, is to be found un­der the Trade Marks Act, 1993.

The court made ex­ten­sive ref­er­ence to for­eign cases re­lat­ing to Google Adwords. It noted that where a court ac­cepts a like­li­hood of con­fu­sion, this must be done in light of the spe­cific facts of that case.

The court con­firmed that the test for con­fu­sion ap­plied in the for­eign cases, which is that con­fu­sion will only be likely if, in light of the text of the ad­ver­tise­ment, a rea­son­ably well in­formed in­ter­net user can­not de­ter­mine if the goods ad­ver­tised orig­i­nate from the brand owner or its com­peti­tor. It also took cog­ni­sance of the trend in for­eign cases which holds that where an ad­ver­tise­ment trig­gered by a spon­sored link pro­motes al­ter­na­tive goods which are not sim­ply im­i­ta­tions, this is likely to be fair com­pe­ti­tion. The court noted in­ter­net users are ac­cus­tomed to spon­sored ad­ver­tise­ments and the need to fil­ter their search re­sults.

Judge Ni­cholls con­cluded that con­sumers ex­posed to the re­spon­dent’s ad­ver­tise­ments were highly un­likely to be con­fused or de­ceived into be­liev­ing that the goods ad­ver­tised were those of the ap­pli­cant, par­tic­u­larly in light of the mul­ti­plic­ity of sup­pli­ers whose web­sites were re­turned in search re­sults. The court men­tioned that this was par­tic­u­larly the case where the text of the ad­ver­tise­ment it­self did not make use of the mark con­cerned. Ac­cord­ingly it re­jected the ap­pli­cant’s claim on the ba­sis of pass­ing off, and dis­missed the ap­pli­ca­tion. The court did note that this case specif­i­cally re­lated to a claim in the ab­sence of a reg­is­tered trade­mark, which dif­fers from the ma­jor­ity of the for­eign cases. How­ever, it pointed out that even a claim on the ba­sis of a reg­is­tered trade­mark would suc­ceed only if con­fu­sion could be shown.

In the con­text of the judg­ment, this should not be read to limit the abil­ity to bring such claim on the ba­sis of di­lu­tion or un­fair ad­van­tage in terms sec­tion 34(1)(c) as this rem­edy is recog­nised else­where in the de­ci­sion, but rather a com­ment on the likely re­quire­ments for a claim for di­rect in­fringe­ment on the ba­sis of sec­tions 34(1)(a) and (b).

This de­ci­sion has brought much- needed clar­ity to the legal po­si­tion sur­round­ing the prac­tice of bid­ding on com­peti­tor key­words. It has con­firmed that such con­duct should con­form with the gen­eral ap­proach to pass­ing off and trade­mark in­fringe­ment, which is that the core test is whether a like­li­hood of con­fu­sion ex­ists. It es­tab­lishes that the pres­ence or ab­sence of this must be eval­u­ated on the ba­sis of the ad­ver­tise­ment it­self and the goods ad­ver­tised (in the con­text of ap­pro­pri­ate sur­round­ing cir­cum­stances) and that this is not al­tered by the fact that the ad­ver­tise­ment is gen­er­ated by the use of a key­word bid­ding ser­vice.

It in­di­cates that ad­ver­tis­ers who wish to bid on com­peti­tors’ trade­marks as key­words may do so, pro­vided they are care­ful to en­sure th­ese ad­ver­tise­ments are clear and not con­fus­ing or oth­er­wise do not take un­fair ad­van­tage of the ad­ver­tis­ing value of a reg­is­tered trade­mark. Traders will need to adapt their mar­ket­ing and brand pro­tec­tion strate­gies to en­sure they ad­e­quately deal with the risks such prac­tices pose to their brands and mar­ket share.

The au­thors acted for M-Sys­tems.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.